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Session Recap: USD slightly firmer in quiet trade

FXstreet.com (Córdoba) - European markets enjoyed a quiet session on Monday as with UK closed for public holiday, trading volumes were thin. The US dollar trades a tad firmer versus most competitors following upbeat employment figures on Friday. In Europe, services PMI came in stronger-than-expected (still in contraction) but retail sales and confidence data disappointed.

EUR/USD trades marginally lower at the 1.3010 area, while GBP/USD remains flat around 1.5560. USD/JPY consolidates above 99.00, having hit a high of 99.44 earlier on the day. The Aussie is among the worst performers, weighed by weak domestic data.

Main Headlines in Europe (in chronological order):

Asian markets up on solid US NFP

Germany: PMI Services returns to contraction in April

EMU: Composite PMI slightly up in April

EMU: Sentix Investor Confidence improves to -15.6 in May

EMU: Annual Retail Sales drop 2.4% in March

Coeure: ECB prepared to cut again

Forex: EUR/JPY retests Friday’s close but stays above 130.00

After extending gains above Friday’s high of 130.34, peaking at 130.41, the market took profits and the EUR/JPY was pulled back throughout the European session and retested Friday’s close at 129.93. The cross remains above the 130.00 psychological level.
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Forex Flash: USD/CAD to rise on USD strength and CAD underperformance – TD Securities

TD Securities analysts think the broader USD direction is higher overall: “Regardless of the “soft patch” of slower growth the US data have been reflecting recently, the US economy will be growing head and shoulders above Europe and Japan through 2014. In the event of any setback for risk (something we consider still quite possible), the USD should benefit from safe-haven demand, meanwhile”, wrote analysts Shaun Osborne and Greg Moore, adding that CAD is to under-perform in the months ahead with Canada’s large current account deficit (3.8%/GDP versus the relatively smaller—and shrinking—US shortfall at 2.5%/GDP) as one of the reasons behind it. “From a technical perspective, we still think the turn up from 1.0050 last week has provided a firm base for the market ahead of medium-term support (200-day MA) around the par zone. Minor resistance is 1.0150”, they said.
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